Overview:
USD/JPY is consolidating with bullish bias after hitting one-month high of 79.14 this morning. China PM Wen Jiabao said the nation's economy was in relatively good shape in the third quarter and he was confident that the country could reach full-year economic targets. USD/JPY buoyed by buying of yen-crosses amid positive global risk sentiment (VIX fear gauge eased 0.99% to 15.07, S&P up 0.41% overnight) on 15.0% surge in U.S. housing starts in September (vs. +2.4% forecast) reached four-year highs; receding worries over the euro-zone debt crisis. USD/JPY is also supported by demand from Japan importers and investment trusts; higher U.S. Treasury yields. But USD/JPY gains tempered by Japan exporter sales; concerns about U.S. "fiscal cliff" that could throw the U.S. economy back into recession.
Preference:
As pair is in bullish channel, long position is recommended above 78.9 with first target 79.2 and in extension 79.4.
Resistance Levels:
R1 - 79.23 (Sept. 19 high)
R2 - 79.39 (200-day moving average)
R3 - 79.66 (Aug. 20 reaction high) 
Alternative scenario:
In case market move downward, selling below 78.9 is recommended with targets 78.8 and  78.6.
Support Levels:
S1 -  78.8 *** intraday Resistance
S2 - 78.61 (Wednesday's low)
S3 - 78.33-78.28 (Monday's low-Friday's low)
Comment:
The pair remains within a bullish channel and is pulling back on its support. USD/JPY daily chart is positive-biased as MACD and stochastics are bullish; five-day moving average is above 15-day MA and rising.